Direct Investment (FDI) policy in construction sector i.e.
Townships, Housing, Built-up infrastructure. The key amendments are
Minimum area to be developed: (a) The minimum built up area has
been reduced from 50,000 square meters to 20,000 square meters for
construction development projects (b) The term ``service housing
plot`` has been replaced by ``service plots`` allowing companies to
have commercial plots. Further the minimum built up area for plot
has been reduced from 10 hector to nil;
Minimum capitalization: The minimum capital requirement (which
is to be brought within 6 months of the commencement of the
project) has been reduced from USD 10 million to USD 5 million for
a wholly owned subsidiary;
Exit: Investors can now exit the project immediately after the
completion of the project or after 3 years from the date of final
investment subject to the development of trunk infrastructure;
Transfer: Transfer from one non resident investor to another non
resident before completion of the project has been permitted
subject to the Foreign Investment Promotion Board approval;
Affordable housing: The cabinet has proposed [is this proposed
or has been approved] that any project which has a 30% allocation
of total project cost for low-cost affordable housing would be
exempted from compliance of the conditions pertaining to minimum
capitalisation and minimum developed area norms;
Completed Projects: For completed projects, 100% FDI under the
automatic route is allowed for operation and management of
townships, malls/shopping complexes and business centres;
Investor Responsibility Eased: (a) Responsibility of Investor
for obtaining all regulatory permission by the investor has been
dropped; (b) The condition regarding development of 50% of project
within 5 years from the date of commencement and making it the
responsibility of the investor has now also been waived.
The aforesaid amendments will come into effect upon the
Department of Industrial Policy & Promotion issues a press note
notifying the changes.
The relaxations in the conditions for foreign investment in real
estate and construction sector are a great boost to the foreign
investors to invest in residential and commercial projects. Real
estate developers see the most incentive in reduction in area and
capital requirements, as they will provide the much needed
liquidity in the sector. Most importantly, these are the major
steps for fulfilment of the Cabinet`s dream of creating smart
cities across the country at affordable pricing.
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On March 10, 2015, the controversial amendments to the land acquisition law were finally passed by the Lok Sabha after facing severe criticism both from the opposition parties as well as from the government's own allies.
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